Central Puget Sound Regional Transit Authority

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Central Puget Sound

Regional Transit Authority

2015 Financial Plan

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ... 1

Financial Policies ... 1

INTRODUCTION ... 3

Description of Sound Transit ... 3

Existing Sound Transit Service ... 3

Voter Approved Service Expansions ... 3

Governance ... 4

Relationship to Local Transit Systems ... 4

Financial Structure ... 4

Financial Policies and Controls ... 5

Financial Oversight ... 6

FINANCIAL PLAN ASSUMPTIONS AND METHODOLOGY ... 7

Funding Sources ... 8

Local Taxes ... 8

Ridership and Fare Revenues ... 9

Grants ... 11

Interest Earnings ... 12

State and Local Assistance ... 12

Inflation Forecasting ... 12

Debt Financing ... 12

Debt Financing Capacity ... 12

Bonding Assumptions ... 12

Debt-to-Equity Ratio ... 13

Summary of Financial Assumptions ... 13

SERVICE AND OPERATING PLAN ... 14

Service Implementation Plan ... 14

ST Express Bus ... 14

Sounder Commuter Rail ... 14

Tacoma Link Light Rail ... 15

Central Link and University Link ... 15

Operating and Maintenance Costs ... 15

CAPITAL PLAN ... 16

Sounder Commuter Rail ... 16

ST Express Bus ... 16

Tacoma Link ... 16

Link Light Rail ... 16

System-Wide Activities ... 17

Debt Service ... 17

Asset Management ... 17

FINANCIAL MODELING RESULTS ... 18

KEY FINANCIAL ISSUES ... 18

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EXECUTIVE SUMMARY

The Central Puget Sound Regional Transit Authority’s Financial Plan represents Sound Transit’s long-range strategic plan updated annually to verify and confirm the sufficiency of funding available to construct, operate and maintain transit programs approved by voters in 1996 (Sound Move) and 2008 (ST2).

Although the “Great Recession” has ended its impact on the agency continues as long range tax revenues are currently estimated at $4.5 billion, or 28.5 percent, below the 15-year financial forecast included in the 2008 voter-approved plan. Due to this decline in forecast revenue, it is no longer possible to complete all ST2 programs by 2023, as was originally contemplated in the plan approved by voters. The Board of Directors has comprehensively reviewed the agency’s capital and operating plans in light of the projected revenue shortfall. This review resulted in a revised capital expansion program in which funding for certain programs has been delayed, reduced or suspended. This Program Realignment is fully reflected in the Agency’s 2015 Financial Plan.

In January 2015 Sound Transit executed a $1.3 billion federal loan under the Transportation Infrastructure Finance and Innovation Act (TIFIA). This is the largest single TIFIA loan to a transit agency in the country and the second largest TIFIA loan overall, and at the lowest rate - 2.38 percent - in the 25-year history of the program.

The low-interest loan, which offers more favorable terms than traditional bonds, will increase Sound Transit's financial capacity by an estimated $200 - $300 million. The impact of this favorable financing agreement is reflected in the 2015 FINAL Financial Plan.

Financial Policies

Sound Transit’s Financial Plan is based on several underlying policies adopted initially as part of Sound Move and subsequently amended by the Board of Directors in July, 2008. These policies preserve the principle of subarea equity, whereby expenditures benefiting a given subarea are commensurate with tax revenues contributed by that subarea.

Distributing Revenues Equitably: Subarea equity is defined as utilizing local tax revenues for

transportation programs and services that benefit the residents and businesses of a subarea generally in proportion to the level of revenues contributed by that subarea. Subareas may fund projects outside their geographic boundary only when the project benefitsthe residents and businesses of the funding subarea. For more detailed revenue and expenditure information, see Appendix A.

Financial Management: Sound Transit maintains policies governing debt, investment management, risk

management, state-of-good repair/replacement, fares, and operating expenses to ensure effective utilization and deployment of voter-approved tax revenues.

Key financial policies are as follows:

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• Manage the agency’s debt capacity on a consolidated basis; Allow the use of short-term debt to bridge the gap between the timing of expenditures and the receipt of revenues, and

• Target Fare box recovery rates as follows: Light Rail – 40.0%; Commuter Rail – 23.0%, and Regional Express Bus – 20.0%

Public Accountability: Sound Transit has engaged independent auditors and appointed a citizen

oversight committee to monitor performance in carrying out its public commitments. In addition, Federal Transit Administration agents are assigned to oversee financial and project management functions and conduct process reviews of planning, design, and implementation of major capital projects to ensure compliance with all federal guidelines.

Voter Approval Requirement: The Sound Transit Board recognizes that the taxes approved by voters

are intended to implement a regional transit system and to provide permanent funding for its future operations, maintenance, capital replacement, and debt service. Although the board has the authority to fund ongoing costs through a continuation of the local taxes authorized by the voters, the board pledges that, after the voter-approved plan is completed, subsequent capital expansion programs requiring continued local taxes at rates above those necessary to operate, and maintain the system and retire related debt will require approval by a vote of the citizens within the Sound Transit District.

Sales Tax Rollback: Upon completion of all voter approved transit projects, the Sound Transit Board will

initiate steps to roll back the rate of sales and use tax collected. First, an accelerated payoff schedule will be established for any outstanding bonds whose retirement will not otherwise impair or affect the ability to collect tax revenue. Once all debt is retired, Sound Transit will implement a tax rollback to a level necessary to pay for system operations and maintenance, fare integration, capital replacement and ongoing system-wide costs and reserves.

Risk Analysis: The Financial Plan is based on a number of assumptions and projections of key

variables such as cost inflation, revenue growth, interest rates and availability of federal funds. Although adequate contingency factors have been included in all these key variables, the financial forecasts are still vulnerable to periods of economic recession, and/or “spikes” in the cost of labor or construction materials. Although the 2015 Financial Plan reflects adequate cash flow, cash reserves and debt coverage to meet all financial obligations, a stall in the economic recovery not currently reflected in the financial plan would most likely require further downsizing of or delay in the roll out of the ST2 program.

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INTRODUCTION

This report contains the 2015 Financial Plan for the Central Puget Sound Regional Transit Authority (Sound Transit) and reflects the agency’s plan to fulfill its mission to implement affordable high-capacity transit programs approved by voters in 1996 and 2008. The plan assumes completion of all affordable capital projects by year end 2023 and provides sufficient funding to ensure continued operation and maintenance of the transit system thereafter.

Description of Sound Transit

Sound Transit, the Central Puget Sound Regional Transit Authority, was created in 1993 pursuant to State enabling legislation (RCW 81.112). It is a special-purpose metropolitan municipal corporation, responsible for the construction and operation of high-capacity public transportation systems within its district. The Sound Transit district comprises five subareas within the contiguous urbanized areas of Snohomish, King, and Pierce counties (see Figure 1 on Page 5). The district is home to approximately 2.8 million people or 80% of the three-county population.

Existing Sound Transit Service

In November 1996 voters approved a Regional Transit System Plan – Sound Move which incorporates elements of commuter rail, light rail, and express bus service into a comprehensive high-capacity regional transit system. Funding to complete Sound Move was secured in 1996 when voters approved the following new taxes: 0.4% Sales & Use Tax; 0.3% Motor Vehicle Excise Tax, and 0.8% tax on Rental Car fees. To date, the Transit Authority has implemented the following services:

1. 83 miles of commuter rail service providing 9 daily round-trips in the south between downtown Seattle and Tacoma - of which five continue farther south to Lakewood. And to the north, four daily round-trips between Seattle and Everett serving approximately two million annual passenger round-trips.

2. 26 express bus routes with a fleet of 280 buses operating approximately 700,000 hours. 3. A 1.6-mile light rail line in Tacoma serving approximately one million annual passenger trips.

4. Associated stations, transit centers, park-and-ride lots and transit access ramps.

5. Beginning in 2009 Sound Transit began light rail service on 15.8 miles of double track from downtown Seattle to Sea-Tac Airport. The agency is also in the process of constructing another 3.1 miles of light rail alignment from downtown Seattle to the University of Washington which is expected to open in the 1st Quarter of 2016.

Voter Approved Service Expansion

In November 2008 voters approved an extensive program of transportation projects to be implemented over the 15-year time period from 2009-2023. This plan when fully implemented will add 34 miles of light rail extending north from the University of Washington through Northgate and on to Lynnwood; to the east from downtown Seattle through Mercer Island and Bellevue to Redmond’s Overlake Transit Center, and to the south from SeaTac Airport through the Kent Des Moines Road area on to Highline Community College and Redondo/Star Lake. The ST2 plan increases the Seattle to Lakewood Sounder commuter rail service by adding four new daily round trips. The plan also includes expansion of regional express bus routes expanding service by 10 to 30 percent in key corridors.

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Governance

Sound Transit is governed by an eighteen-member board consisting of the Secretary of Transportation for the State of Washington and seventeen locally elected city and county officials who are appointed by the legislative authority of each of the member counties, based on nominations from the respective county executives. Each county has one representative per 164,000 residents within the Sound Transit district. Currently, there are 10 representatives from King County, 4 from Pierce County, and 3 from Snohomish County.

The board structure defined in RCW 81.112 was designed to establish linkages between Sound Transit and other governmental entities that will foster efficient coordination and delivery of transportation services. As noted above, the WSDOT Secretary automatically serves on the Sound Transit Board and of the county appointees, one must be an elected official from the county’s largest city, and at least half the appointees shall also be members of the legislative authority of a local transit system.

Major actions of the board require a two-thirds majority. These actions are defined by State law to include at least the following: System plan adoption and amendment, system phasing decisions, authorization of annexations, modification of board composition, and employment of the Chief Executive Officer.

Relationship to Local Transit Systems

Sound Transit is an independent regional transit authority. Four other transit agencies operate public transit services within the Sound Transit district: King County Metro, Pierce Transit, Community Transit, and Everett Transit. Sound Transit’s Regional Express Bus services are operated by King County Metro, Pierce Transit and Community Transit under joint operating agreements. In addition, Sound Transit has contracted with King County Metro to operate the Initial Segment of the Link light rail system. The Sounder commuter rail service is operated through a contract with Burlington Northern Santa Fe (BNSF). Sounder commuter rail cars and locomotives are maintained under a contract with Amtrak.

Financial Structure

Sound Transit financial statements are maintained in accordance with methods prescribed by the Washington State Auditor under authority of RCW Chapter 43.90. Sound Transit uses Budgeting, Accounting, and Reporting Systems for proprietary type districts in the State of Washington as well as Generally Accepted Accounting Principles established by the Government Accounting Standards Board. Propriety funds are accounted for using the accrual basis of accounting. Therefore, revenues are recognized when earned, expenses are recognized when incurred. Fixed assets are capitalized when purchased, and long-term liabilities are accounted for as incurred. Funds are accounted for on a cost of service or capital gains measurement focus. This means all assets and all liabilities (whether current or non-current) associated with Sound Transit’s activities are included on its balance sheets. Note, however, that the Finance Plan is maintained on a cash basis in accordance with federal guidelines (see Finance Plan Assumptions and Methodology section below).

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Financial Policies and Controls

The ST2 Plan approved by the Board of Directors preserves the financial policies and controls set forth in the voter-approved Sound Move transportation and financing plans. Chief among these is a commitment to subarea equity. State law requires high-capacity transit system plans to include an equity element that identifies: (i) revenues anticipated to be generated by corridor and by county; (ii) the phasing of construction and operation of facilities and services in each corridor; and (iii) the degree to which the revenues generated within each county will benefit the residents of that county.

The financial policies state that equity will be defined as “utilizing local tax revenues and related debt for projects and services which benefit the subareas generally in proportion to the level of revenues each subarea generates.” The Sound Transit district is divided into five subareas – Snohomish, North King, South King, East King, and Pierce (See Figure 1 below). In adopting the plan, the Sound Transit Board agreed that the facilities, projects, and services identified in the original voter-approved plan represent a reasonable definition of equity for purposes of satisfying both public policy concerns and statutory requirements.

Following are the key financial policies adopted with the Financial Plan:

• Require an average net debt service coverage ratio of 1.5 times or greater in any year of the financial plan.

• Maintain a two-month operating and maintenance cost reserve for each Subarea. • Manage the agency’s debt capacity on a consolidated basis; and

• Allow the use of short-term debt to bridge the gap between the timing of expenditures and the receipt of revenues.

Figure 1 – Sound Transit Taxing Districts System-wide expenditures that benefit

all subareas are funded by an equal percentage of local tax revenues contributed by each of the five Subareas plus interest earnings. These elements include agency administration, the integrated fare program, innovative technologies and planning for future capital investments that may be placed before the region’s voters.

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Financial Oversight

Annual Financial Statement and Independent Auditor’s Report: At the close of the fiscal year on

December 31, an independent auditor’s report is prepared including balance sheet, statements of revenues and expenses, findings (notes to the financial statements) and formal opinion. This report is presented to the Board of Directors.

Annual Single Audit Report As a recipient of federal funding, Sound Transit is required to engage an

independent auditor to review compliance with U.S. Office of Management and Budget Circular A-133. This directive specifies accounting procedures and internal controls to insure that federal funds are managed in compliance with federal laws and regulations. This report is presented to the Board of Directors.

FTA Triennial Review: At a minimum of three-year intervals, the Federal Transit Administration (FTA)

conducts a review to ascertain Sound Transit compliance with 23 functional requirements of agencies receiving federal funds. These include activities such as procurement, fare policy, drug free workplace, financial control and disadvantaged business enterprise.

Project Management Oversight Consultant: For major construction projects under a Full Funding

Grant Agreement (FFGA), FTA contracts with an independent firm to monitor engineering design, cost estimates and construction/procurement practices. FFGA projects include the Link light rail system from SeaTac Airport to the University of Washington.

Financial Management Oversight (FMO): Is provided by a financial expert under contract to FTA. This

specialist reviews financial plans to verify that all assumptions and calculations are reasonable and in accordance with FTA Guidance for Transit Financial Plans. The FMO consultant also requires that Sound Transit conduct “stress tests” to validate that the agency has sufficient capacity to meet all financial obligations even in the event that costs are higher or revenues lower than assumed in the Financial Plan.

Citizen Oversight Panel: This is a volunteer body appointed by the Sound Transit Board to oversee and

monitor implementation of Sound Move and ST2. The panel monitors performance of Sound Transit and reports to the Board two or more times per year on findings and recommendations for improvements to ensure the success of agency plans and investments.

Annual Report on Subarea Equity: One of the key commitments of Sound Move and now ST2 is to

assure that Sound Transit delivers a fair share of investments to each of the five geographic subareas commensurate with their contributions of tax-based revenues to the Authority. To insure that this concept is maintained, Sound Transit engages an independent auditor to review the subarea reports for compliance with agreed-upon procedures for allocation of resources among the subareas. The findings of this report are presented to the Citizen Oversight Panel and the Sound Transit board of directors.

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FINANCIAL PLAN ASSUMPTIONS AND METHODOLOGY

The long-term Financial Plan is produced in accordance with the Federal Transit Administration’s (FTA) “Guidance for Transit Financial Plans.” The plan is maintained on a cash basis. It states and projects all agency sources and uses of funds for the period 1997-2060 with special focus on 2009 – 2023 which is the ST2 start to completion time period. The Financial Plan presents the agency’s operating statements, sources and uses statements, debt amortization and capital replacement funding schedules for the period 1997-2060. The Financial Plan incorporates the agency’s most current proposed or board-adopted operating budget and long-term capital and operating plans for ST Express bus, Sounder commuter rail and Link light rail as included in both the Sound Move and ST2 voter-approved programs.

At the heart of the Financial Plan is the Financial Planning Model. This model incorporates all financial policies, assumptions, revenue forecasts and program cost estimates needed to calculate cash flow, debt financing and key performance indicators (e.g., cash balances and debt service coverage ratios) over the long-range planning horizon. The diagram below illustrates the concept of the model.

Key Elements of Financial Plan

Financial

Model

1997 - 2060

Board-Adopted

Financial

Policies

Program

Costs from

Budget and

Engineers’

Estimates

Key Planning

Assumptions

Results

Independent

Inflation

Forecasts

Independent

Revenue

Forecasts

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Funding Sources Local Taxes

The State enabling legislation defines the taxes that may be levied by a regional transit authority. These include: (1) Retail sales and use tax of up to 0.9%; (2) Motor vehicle excise tax (MVET) of up to 0.8%; (3) Employer tax of up to $2.00 per employee per month; and (4) Sales and use tax of up to 2.172% on taxable retail car rentals. The first three taxes may be levied based on a simple majority vote within the regional transit district. The car rental tax may be implemented by board action only if voters have approved the levy of a motor vehicle excise tax. The regional transit authority can pledge the revenues from any of these taxes to the repayment of bonds issued for high-capacity transit purposes. Once approved by voters, the taxes may be implemented by a vote of the board and may continue in perpetuity at the board’s discretion.

A sales and use tax of 0.4% and an MVET of 0.3% were approved for Sound Transit’s use in a November 1996 referendum. Subsequent to this referendum, the board also authorized a rental car tax of 0.8%. Approval of these taxes was in connection with the Sound Move Ten-Year Regional Transit Plan, adopted by the Sound Transit Board in May 1996. In November 2008, voters approved increasing the sales tax rate to 0.9% to provide funding for the Phase 2 (ST2) plan.

Neither the sales and use tax nor the rental car tax has a sunset provision; however, the Sound Transit MVET collections will expire at the end of 2028. Once the capital portion of all voter approved programs is complete, and all related outstanding bonds have been retired, the board will roll back tax rates to a level sufficient to generate the funds necessary to fund asset replacement, and to perpetually operate and maintain the facilities and services implemented as part of the current system plan approved by voters. Forecasting tax revenues for the Sound Transit district presents unique challenges, as the Agency’s jurisdictional boundary does not correspond to any other economic reporting entity. The district includes incorporated and unincorporated areas in three counties – King, Pierce and Snohomish. Sound Transit receives forecasts of sales and motor vehicle excise tax revenue bases at the county level from a local consulting economist. The tax base forecasts are grounded on economic and population projections from the Puget Sound Economic Forecasting Model, a regional econometric model of King, Pierce, Snohomish and Kitsap counties. The variables used to predict taxable retail sales include Puget Sound personal income, housing permits and the unemployment rate, among other variables. The motor vehicle excise tax base is forecast based on predictions of motor vehicles by type, driving-age population and the unemployment rate, as well as the expected average value of motor vehicles. These forecasts project an average annual growth rate of approximately 3.99% for sales tax and 2.69% for MVET tax bases over the period 2009 to 2023.

Countywide tax base forecasts provided by a consulting economist are then allocated to each of the five Sound Transit subareas based on actual historical data from the State Department of Revenue and the State Department of Licensing.

Figure 2 on the next page and Appendix B present annual tax revenue forecasts through 2040. The steep rise from 2008 to 2010 reflects the change in Sound Transit sales tax rate from 0.4% to 0.9%, effective April 1, 2009.

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Figure 2 – Sound Transit Tax Revenue

Ridership and Fare Revenue

Fare revenues are a product of transit ridership and fare prices. Ridership in turn, is a result of transit service provided, as well as a number of other factors. In the near term, ridership can be estimated based on past trends and the amount of transit service to be provided (e.g. routes, service frequency, parking capacity at park-and-ride facilities, etc.).

For long-range ridership forecasts, including light rail, the Sound Transit travel demand forecasting model (ST Model) is used. In the ST Model, transit ridership forecasts are based on observed origins and destinations of transit riders, observed transit line volumes, and a realistic simulation of observed transit service characteristics. The ST Model is executed in three stages. In Stage 1, regional changes in demographics (households and employment) are taken into account. In Stage 2, changes in transit and highway travel times, which reflect congestion levels, and cost factors such as parking costs, transit fares, and household income are taken into consideration. In Stage 3, incremental changes to the transit network such as addition of light rail services offered are incorporated, and a forecast of zone to zone transit trips is prepared for the region. Each light rail alternative ridership forecast is paired with a comparable baseline ridership forecast so the effects of incremental changes in the transit network can be clearly measured. 500 1,000 1,500 2,000 2,500 20 09 20 11 20 13 20 15 20 17 20 19 20 21 20 23 20 25 20 27 20 29 20 31 20 33 20 35 20 37 20 39

SOUND TRANSIT TAX REVENUE

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Table 1

Sound Transit Ridership (Millions of boarding passenger trips)

2013 2014 2020 2030

Sounder Commuter

Rail 3.0 3.4 3.6 6.3

ST Express Bus 16.6 17.7 17.7 15.5

Link Light Rail* 9.7 10.9 24.0 84.1

Total 29.3 32.0 45.3 105.9 * Excludes Tacoma-Link

The Financial Plan assumes the Agency continues to collect fare revenues from Sound Transit operations — ST Express bus, Link light rail and Sounder commuter rail. Fare revenue forecasts are based on ridership forecasts and assumptions regarding fare levels and price elasticity. The future fare structure assumes the following characteristics:

Fares will be structured with a base fare plus an increment based on the distance (zone) traveled, similar to the fare structure approved by the board of directors for Sounder and Link light rail.

Sound Transit regional express bus fares will compare to bus fares of other transit agencies serving the three counties, including zone fares;

There will be no charge for bus-rail transfers;

There will be discounts offered to seniors and youth; and

Monthly passes and employer passes will be sold at a discount.

In addition, fares are assumed to generally increase with inflation over time, or are increased as need to maintain board-adopted fare recovery ratios.

Allocation of regional fare revenue to Sound Transit from collections through the ORCA card system are based on an inter-local agreement reached between Sound Transit, Community Transit, Everett Transit, King County Metro, Pierce Transit, Everett Transit, Kitsap Transit, and Washington State Ferries.

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Table 2 below shows the fare revenue forecast for selected years. Appendix B shows the agency-wide fare revenue forecast from 2009 - 2040.

Table 2

Sound Transit Fare Revenues ($millions)

2013 2014 2020 2030

Sounder Commuter

Rail $9.5 $10.5 $11.3 $20.2

ST Express Bus $32.6 $33.8 $34.2 $31.8

Link Light Rail* $14.8 $15.9 $40.8 $109.3

Total $56.9 $60.2 $86.3 $161.3 * Excludes Tacoma-Link

Grants

Federal funding is generally secured through conventional Federal Transit Administration (FTA), Federal Highway Administration (FHWA) and Federal Railroad Administration programs currently authorized under the Safe, Accountable, Flexible, and Efficient Transportation Efficiency Act: A Legacy for Users (SAFETEA-LU), MAP-1, and future authorizations. Funding will be secured through both congressional appropriations and regional/national grant competitions. Funding awards are still provisional, subject to annual Congressional budget appropriations.

Table 3

Sound Transit Grant Funding Assumptions 2009 – 2023

Note that above amounts are on a grant awards basis, and may be slightly larger than similar amounts shown in Sources & Uses tables on a grant drawdown (cash) basis due to the anticipated delays in actually receiving grant funds, which are on a reimbursement basis.

Funding Sources Total Grants 2009-2023 Grant drawdowns 2009-2014

Anticipated Funding

Section 5309 New Start-Sounder $ 1,362,154 $ 1,362,154 $ -Section 5309 New Start-Initial Segment $ 47,789,264 $ 47,789,264 $ -Section 5309 New Start-U Link $ 813,000,000 $ 540,935,815 $ 272,064,185 Section 5309-Small Start $ 75,000,000 $ - $ 75,000,000 Section 5309 New Start-Lynnwood $ 600,000,000 $ - $ 600,000,000 FTA Formula Funding (Section 5307, 5309 FG, 5337 and 5339) $ 643,541,657 $ 244,436,561 $ 399,105,096 CMAQ $ 75,864,829 $ 37,096,975 $ 38,767,854 WSDOT Regional Mobility $ 37,683,514 $ 28,826,113 $ 8,857,401 FRA $ 35,046,164 $ 32,192,308 $ 2,853,856 TIGER $ 34,000,000 $ 10,000,000 $ 24,000,000 Section 5309 Bus $ 24,701,674 $ 24,701,674 $ -Other Competitive Funding Sources $ 23,523,249 $ 23,523,249 $ (0)

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Interest Earnings

The Financial Plan assumes that Sound Transit will earn a 2.5% rate of return on General Fund cash

balances throughout the planning horizon (2040). In accordance with Sound Transit financial policies, all interest earnings are credited to at the Agency level offset expenditures for system-wide programs. State and Local Assistance

State and local financial assistance includes funds that are either granted directly to Sound Transit or are provided as a credit against taxes or fees that would otherwise be levied on construction activities by other units of government. The agency has commitments from other jurisdictions for providing funds for ST Express, Light Rail, and Sounder projects. Such revenues are not included in the Financial Plan until agreements with other jurisdictions are signed.

Inflation Forecasting

Three inflation forecasts are used at Sound Transit to inflate costs over time in the long-range Financial Plan. The Consumer Price Index (CPI-U Seattle) is applied to Operating & Maintenance expenses, and “soft” capital costs, excluding construction & land acquisitions. The CPI forecast and tax revenue base forecasts are developed by a local consulting economist. The Construction Cost Index is applied to construction-related elements of the capital program. A Seattle-area forecast of the CCI index is prepared for Sound Transit by an outside consultant based on projected changes to the price of a “shopping cart” of goods related to construction. A right-of-way index (ROWI) forecast is applied to property acquisition costs.

Debt Financing

The Financial Plan assumes Sound Transit’s long-term debt will primarily be in the form of 30-year bonds. The agency’s current bond ratings are as follows: Moody’s – Aa1 and Aa2 for Senior and Parity bonds, respectively, and Standard & Poor’s – AAA, all bonds. In addition to 30 year bonds the agency has executed a $1.3 billion federal loan under the Transportation Infrastructure Finance and Innovation Act (TIFIA) at an interest rate of 2.38%.

Debt Financing Capacity

Although Sound Transit does not levy property taxes, its debt limit pursuant to State law, like that for all municipalities in the State of Washington, is based on the assessed valuation of real property located within the regional transit authority district. There are two types of bond limits — one for non-voted debt, and the other for voted debt.

Sound Transit may issue total outstanding debt in an amount up to 1.5% of assessed valuation within its district without special voter authorization.

Upon the approval of 60% of the electorate, Sound Transit could issue bonds in amounts up to 5.0% of assessed valuation.

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Debt service coverage ratio is the amount of revenues available after funding operating expenses divided by debt service costs.

The Financial Plan assumes 1.25% issuance costs and 7.15% of outstanding principal set-aside for bond reserves. The plan further assumes that future bonds will be issued at an average interest rate of 5.75% and that most bonds will be structured with a 30-year term, with principal payments deferred for five years. Bonds may have a non-level principal amortization structure.

Debt-to-Equity Ratio

Title 81.104.130 of the Revised Code of Washington states that agencies providing high capacity transportation service shall determine optimal debt-to-equity ratios. The term “debt-to-equity ratio” is most commonly applied to publicly traded companies whereby “equity” is determined to mean stockholders equity. For Sound Transit, the ratio can be interpreted as follows:

Debt refers to total debt issued (bonds).

Equity refers to the amount of capital expenditures made (“taxpayer’s equity”).

Under these definitions, the debt-to-equity ratio would be the cumulative amount of debt incurred (dollar amount of bonds issued) divided by the amount of capital investments (dollar amount expended on capital programs). In effect, it is the proportion of capital assets funded from bond issues.

The agency debt-to-equity ratio reaches a maximum of 47% in 2024, at the completion of the ST2 capital plan, and then declines thereafter.

Summary of Financial Assumptions

• Sales Tax Rate: 0.4% 1997 - 2009; 0.9% 2009 + (subject to potential sales tax rollback, after 2024) • Sales Tax Average Annual Growth: 4.0% 2009 - 2023

• MVET Tax Rate: 0.3% 1997 – 2028 (tax ends in 2029) • MVET Tax Average Annual Growth: 2.7% 2009 - 2023 • Rental Car Tax Rate: 0.8%

• Rental Car Average Annual Growth Rate: 1.1%

• Average fare prices increase at a rate generally increase with inflation • Sound Transit to receive $2.4 billion in federal grant revenues 2009 - 2023 • CPI Average Annual Cost Inflation: 2.0% (including contingency) 2009 - 2023 • CCI Average Annual Cost Inflation: 3.2% (including contingency) 2009 - 2023 • ROWI Average Annual Cost Inflation: 3.6% (including contingency) 2009 - 2023 • Interest Rate earned on General Fund and Reserve Fund balances: 2.5% • Bond Interest Rate: 5.75%

• Bond Term: 30 years

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SERVICE AND OPERATING PLAN Service Implementation Plan

Sound Transit services currently consist of four modal elements: (1) ST Express Bus; (2) Sounder Commuter Rail; (3) Tacoma Link Light Rail; and (4) Central Link Light Rail. These elements have been consolidated under the Operations Department. The summary below includes all services approved by voters under both the Sound Move and ST2 ballot propositions.

ST Express Bus

Through its partner agencies – King County Metro, Pierce Transit and Community Transit, Sound Transit currently operates 280 buses on 26 routes with a total of approximately 700,000 annual vehicle hours. ST Express bus ridership in 2014 was almost 17.7 million, compared to 16.6 million in 2013. ST Express buses currently carry almost 61,000 passengers each weekday.

The ST Express capital program is focused on providing two types of transportation improvements: community connection facilities and HOV improvements. Community connection facilities include transit centers, park-and-ride lots and transit access improvements. These community connection facilities improve access to the regional transit system and connections to local transit services. The HOV improvements are designed to allow quick and reliable express bus service throughout Sound Transit’s service area. The HOV access projects were implemented through a partnership between Sound Transit and WSDOT. Sound Transit has constructed special access ramps to make it easier for transit and vanpools to use HOV lanes at some of the region’s most congested freeway intersections. These improvements are intended to expand and improve the existing HOV network within the District. Sound Transit expects to increase ST Express bus service in the highest-need corridors by improving service frequency, expanding hours of operation and adding trips to relieve overloads.

Sound Transit will continue to participate with Washington State Department of Transportation (WSDOT) in developing High Occupancy Vehicle (HOV) projects as part of the I-90 corridor across Lake Washington. In addition, Sound Transit will continue to improve passenger amenities such as providing more accessible low-floor buses and developing real-time next bus arrival information at stations.

Sounder Commuter Rail

The Sounder Commuter Rail capital program has delivered 82.5 miles of peak-period train service primarily using existing BNSF railroad tracks between Everett, Seattle, Tacoma and Lakewood. The Sounder Commuter Rail system uses conventional railroad locomotives and passenger coaches. The goal of the Sounder Commuter Rail is to increase the passenger-moving capacity of the regional transportation system while not impeding the flow of freight.

The Sounder Commuter Rail system includes 13 stations on two lines that span three counties. The North Line runs from Seattle to Everett; the South Line runs from Seattle to Lakewood. Sounder Commuter Rail service between Tacoma and Seattle began in 2000 with two round trips on weekdays and weekend event service. Service has gradually been expanded to ten round trips between Tacoma and Seattle and four round trips (with two additional trips provided by Amtrak) between Everett and

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Tacoma Link Light Rail

Tacoma Link Light Rail connects downtown Tacoma with a regional transit center at the Tacoma Dome Station, where riders can transfer to Sounder Commuter Rail, ST Express regional buses and local Pierce Transit buses. Tacoma Link began service in August 2003. Ridership in 2014 was approximately 960,000. Tacoma Link Light Rail trains currently carry more than 3,200 passengers each weekday.

Central Link and University Link

The System Plan initially envisioned a 21-mile light rail system running from the University District in Seattle, through downtown Seattle, to just south of the Airport in the city of SeaTac. Sound Transit is building these projects in phases. Phase one is the 14-mile “initial segment” with 12 stations running from downtown Seattle to Tukwila. Sound Transit received a $500 million “Full Funding Grant” from the FTA to pay a portion of the costs of the Seattle to Airport segment. Service on the Seattle to Tukwila segment began in July 2009.

The second phase, Tukwila to the Airport, opened in December 2009. Link Light Rail ridership in 2014 was nearly 11 million, compared to approximately 9.7 million in 2013. Link Light Rail currently carries approximately 32,900 passengers each weekday.

The last phase of the original System Plan is University Link, a three-mile light rail extension that includes a tunnel east from the Downtown Seattle Transit Tunnel, crossing under Interstate 5 and proceeding east and then north to the Capitol Hill Station serving the First Hill/Capitol Hill urban center. The tunnel route then crosses under the ship canal to an interim terminus at the University of Washington station at Husky Stadium, serving the University of Washington campus and the surrounding neighborhoods. The University Link project will receive up to $813 million in grants from the FTA, which is expected to fund approximately 40% of the $1.9 billion cost of building the line. Construction began in March 2009, and operations are expected to begin in 2016.

Sound Transit 2 includes 36 new miles of light rail service and includes extension of service from the University of Washington north to Northgate and then to Lynnwood, with seven stations. Service to Northgate is expected to begin in 2021, with service to Lynnwood beginning in 2023.

Light rail service from downtown Seattle across Interstate 90 to Bellevue and downtown Redmond (“East Link”) is planned, with service to Bellevue and Overlake in Redmond by 2023. East Link expects to serve 50,000 daily riders by 2030.

Service from SeaTac Airport to S200th Street (“Angle Lake”) has been accelerated, and is expected to open by 2016 with service to the Kent Des Moines Road area by 2023. Sound Transit expects 4,500 daily boardings on this South Link extension.

Operating and Maintenance Costs

Operating and maintenance (O&M) costs are projected by transit mode (bus, commuter rail and light rail) as part of the annual budget process taking into account all scheduled service expansions. For ST Express and Sounder, O&M costs forecasts are based on experience in contracting with the local service providers. For light rail, the O&M cost estimates are based on a cost build-up model for each function (e.g., vehicle operations, vehicle maintenance, and facilities maintenance) including the cost of administration and support services. The O&M costs for the three modes of service are presented in Appendix B.

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CAPITAL PLAN

Sound Transit’s capital program includes projects for system expansion, system enhancement, rehabilitation & replacement and administration. Sound Transit updates the capital program annually as part of its comprehensive budget process.

Sounder Commuter Rail

The Sound Move capital program for Sounder was completed in 2012 when revenue service from

Tacoma to Lakewood began on October 8th of this year.

The ST2 plan approved by voters in November 2008 includes programs that will increase the capacity of the highly utilized Tacoma-Lakewood service by adding four round-trip trains daily and potentially extending train lengths up to eight cars. Additional locomotives and passenger cars will be acquired to support this capacity and service expansion. Station access will be improved at Mukilteo, Auburn, Sumner, Puyallup, Tacoma, South Tacoma and Lakewood. There will be track and structure upgrades from Tacoma Dome to Reservation Junction. Funds are also included to construct and operate a commuter rail operations and maintenance facility.

ST Express Bus

The ST Express capital improvement program has delivered a variety of facilities including transit centers, park-and-ride lots, flyer stops and transit access improvements. These facilities improve access to the regional transit system as well as provide connections to other local transit services.

High occupancy vehicle (HOV) access projects have been implemented through a partnership between Sound Transit and WSDOT. These special access ramps make it easier for transit and carpools to use HOV lanes at some of the region’s most congested freeway intersections.

Tacoma Link

Tacoma Link is a 1.6-mile at-grade light rail line with five stations, including the Tacoma Dome multimodal station. Tacoma Link began service in August 2003. Conceptual design, preliminary engineering and environmental review are currently underway to evaluate potential extension of the Tacoma Link system. This evaluation is expected to be completed by the fourth quarter of 2015.

Link Light Rail

The following light rail alignments were funded by voters in 1996: the Initial Segment of Central Link (13.9 miles), Airport Link (1.7 miles), South 200th (1.6 miles), and University Link (3.1 miles). In addition, preliminary engineering and initial planning for extending the alignment to Northgate were also funded at that time. The Initial Segment began revenue service in July 2009. The Airport Link extension connecting the Tukwila station to SeaTac Airport opened in December 2009. The University Link segment connecting downtown to the University of Washington will be completed in 2016.

Future expansion approved by voters in November 2008 will add approximately 36 miles of light rail alignment to the system by extending north from the University of Washington through Northgate on to Lynnwood, south from Sea-Tac Airport to the vicinity of Highline Community College and 272nd Street, and east from Seattle through Bellevue to the Overlake Transit Center area of Redmond.

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In the south, service is planned to reach the Angle Lake area by 2016, and Kent Des Moines Road by 2023. Additional extensions to South 272nd Street or the Federal Way Transit Center are under review for future development.

Funding for planning, environmental documentation, preliminary engineering and right-of-way preservation of future light rail extensions to Tacoma in the south corridor and Redmond in the east corridor was provided in the ST2 program approved in November 2008.

System-Wide Activities

Sound Transit’s capital and operating programs include funding for projects that are regional in scope, including: (1) Research and Technology Fund; (2) Fare Integration; (3) Phase 3 Planning; and (4) Agency Administration capital and operating projects.

The Financial Plan also includes provision for general fund reserves, bond reserves, bond issuance costs, and a project cost contingency reserve. Sound Transit maintains O&M reserves equal to two months operating costs. Cash is managed so that a minimum $5 million operating balance is maintained in the General Fund at all times.

Debt Service

The Financial Plan assumes that in the years following completion of all voter-approved projects Sound Transit may reduce the sales tax rate to a level of not less than 0.8% so long as the resulting revenue is sufficient to meet all ongoing financial requirements. In order to further roll back this tax, the RTA district can begin a program of accelerating debt service payments in compliance with the sales tax rollback policy. Accelerated debt service payments will substantially reduce total long-term interest payments.

Asset Management

The Sound Transit Financial Plan provides for the replacement of key operating assets through the use of a sinking fund. Contributions to this fund began in 2009. Annual contributions to fund future asset replacement or mid-life maintenance activity is calculated for each class of asset based on; original cost, in-service date, estimated asset life, in addition to other financial factors. The annual contribution is a fixed annual payment for each unique combination of asset class and replacement cycle.

The annual payment calculation assumes that 77% of replacement costs will be funded by Sound Transit revenues, with the remaining 23% funded from federal and local grants. The interest earnings rate is currently set to 3.5% annually. Compounding of interest earnings allows annual payments to the sinking fund to be less than the annual straight-line depreciation cost of an asset.

The replacement date for assets follows generally-accepted principles for the useful life of transit facilities and equipment. For buses the industry standard is a 12-year replacement cycle, for Sounder and Light Rail vehicles, the cycles are from “Methodology for Projecting Rail Transit Rehabilitation and Replacement Capital Financing Needs,” by Robert L. Peskin, published in Transportation Research Record 1165.

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FINANCIAL MODELING RESULTS

The summary results of the Sound Transit Financial Planning Model are found in Appendix “A” and represent the combined Sound Move and ST2 propositions approved by voters in 1996 and 2008 respectively.

The 2015 FINAL Financial Plan reflects all of the assumptions and contingencies as detailed throughout this presentation and at present meets all criteria stated in the Financial Policies and Controls section.

KEY FINANCIAL ISSUES Financial Risks

Stress tests are regularly conducted on the Financial Plan in order to assess the extent to which the Agency’s plans are susceptible to not being fully met due to external risk factors. Completion of a series of these tests has confirmed that at the agency level Sound Transit has sufficient financial flexibility to withstand significant adverse financial shocks. However, on a stand-alone basis, individual Subareas are more susceptible to negative financial developments than the agency as a whole.

Key Risk Areas

Federal Funding: Sound Transit has received $500 million under a Full Funding Grant Agreement

(FFGA) with the Federal Transit Administration (FTA) for the Initial Segment project. In January 2009, FTA approved a FFGA for $813 million for the University Link extension project. The ST2 program assumes another $600 million of FTA discretionary funding for project(s) comprising the 34-mile Link extensions. Although this amount represents a much lower proportional share of federal participation for the future light rail system than FTA has provided for the initial 20 mile system, Sound Transit cannot be absolutely certain of any FTA discretionary funding in the future. And while the FTA has an excellent record of meeting its total obligations under its FFGAs, there is a risk that annual appropriation levels will not meet the schedule outlined in the FFGA. A delay in the receipt of federal funds will make it necessary for the agency to issue more bonds, thereby increasing debt service payments and ultimately reducing the debt service coverage ratio.

Local Tax Revenue Growth: Sound Transit primarily relies on an independent forecast of its local tax

basis. The tax revenue forecast projects continued improvement through 2017 then stabilizing thereafter. The forecast included in the Financial Plan does not anticipate another recession through the end of the ST2 program construction phase in 2023. However, long-term economic forecasts are inherently uncertain and actual economic growth in the region could be lower than the current forecast, especially if the region experiences a period of “stagflation” (high inflation with stagnant economic growth). If revenue growth were to fall below the current forecast, the agency’s revenue collections as well as its long-term bonding capacity would be reduced. A significant reduction in local tax revenues would have a negative impact on the agency’s financial condition. See Appendix D for forecasts of tax revenues.

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Inflation: The Puget Sound region has experienced relatively mild price increases for general goods and services. The CPI-U is currently very low and is projected to remain in the 2.0% to 2.6% range through 2030.

The Financial Plan incorporates long-term; consumer price, construction cost, and real estate cost inflation forecasts provided by independent consultants or developed internally using data from external sources. The current forecast projects long term inflation will reflect historically moderate levels if inflation were to rise significantly beyond this forecast, or if Sound Transit’s construction schedules were to be delayed, the agency’s capital and operating costs would also rise beyond the current forecast. Historically, retail sales and use tax, the agency’s primary revenue source, has risen with general price levels partially mitigating this risk. See Appendix D for forecasts of cost inflation.

Operating and Maintenance Costs

The Financial Plan utilizes O&M cost build-up models to project costs for Sounder, Link Light Rail, Tacoma Link and ST Express bus services. These models calculate the annual cost associated with providing projected service levels based on the amount of inputs: staffing, equipment, and materials, needed to provide service at those projected levels. The parameters for these models are developed from experience of both Sound Transit and other transit agencies operating similar services. It is recognized that O&M costs are affected by many factors, including partnership operating agreements and changes in operating efficiency. Fuel and power costs are subject to change depending on regional and even international market conditions. Adverse changes in these other factors may lead to higher O&M costs than projected in the Financial Plan, reducing financial capacity and flexibility.

Sensitivity Analysis/Stress Tests

A series of sensitivity analysis or “stress tests” were conducted to assess the extent to which the agency’s ability to fulfill its voter approved mission is at risk due to the impact of external factors on the Financial Plan.

The five stress tests conducted are as follows:

Sales Tax Growth Rate: This test quantifies the extent to which the agency’s estimated sales tax

revenues could decline before the net debt service coverage ratio (DSCR) falls to a minimally sustainable level of 1.15x. At the agency level, sales tax would need to decline approximately $980 million or 8.7% (2015 – 2023) versus the current financial plan before net DSCR falls to 1.15x.

Bond Interest Rates: How much could interest rates paid on all agency bonds issued after 2014

increase before net DSCR drops to 1.15x? Interest rates would need to increase to 280 basis points to 8.55%, up from 5.75%, before net DSCR declines to 1.15x.

Capital Cost Inflation: How much additional capital spending could the agency absorb beyond current

planning estimates before net DSCR drops to 1.15x? The agency could sustain up to $2.4 billion in additional project costs before the net DSCR declines to 1.15x.

Grant Revenues: How much would Grant revenues need to fall before the agency net DSCR fell to the

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approximately 335 basis points or more than double over the 2015 – 2023 time-period before net DSCR declines to 1.15x.

Mitigation of Cost Increases or Funding Shortfall

In the event of cost increases or funding shortfalls, there are several mitigation strategies that could be implemented:

Apply savings from bonding: The Financial Plan uses conservative assumptions regarding bonding

and debt coverage, which are appropriate for long-range planning. However, as the agency implements the capital program, it may be possible to apply savings from debt service costs as the projects begin their construction phases.

Changes to financial policies and financial planning assumptions: The agency’s financial policies

and financial planning assumptions, such as debt service coverage and capital replacement, could be altered within prudent financial parameters to make additional resources available.

Construction schedule extended: Delaying the schedule could generate additional resources. In most

years, tax revenues increase faster than cost inflation. Another benefit in extending the construction schedule is the postponement of operating costs and debt service costs.

Control O&M costs: If growth of O&M costs increase significantly above inflation, Sound Transit could

find alternate providers for services or reduce the level of service on routes/runs that have high costs and/or low ridership efficiencies.

Sources of Funds

Sound Transit Tax Revenues: Sound Transit is primarily funded by three local taxes: (1) Sales and use

tax of 0.9% (increased by 0.5% by Proposition 1 effective April 1, 2009), (2) Motor vehicle excise tax (MVET) of 0.3%, and (3) Rental car tax of 0.8%. Sound Transit’s combined tax revenues are projected to total $11.1 billion during the period 2009-2023, which is down $4.6 billion or 29% versus the forecast included as part of Proposition 1 approved by the voters in November 2008.

Federal Grant Support: In addition to local tax revenues, the agency expects to receive approximately

$2.4 billion in grant funding over the 2009 through 2023 time period. Of this amount, $1.4 billion is from two discretionary grants provided by the Federal Transit Administration (FTA). One represents an existing $813 million FFGA for the University Link light rail segment, and the other is an assumed $600 million FFGA for the Northgate to Lynnwood light rail segment. The balance of Grant revenues is expected to come primarily from FTA formula grants and other competitive grant programs.

Operating Revenues: Fares and Other Revenues, which include interest earnings, total $1.3 billion in

the 2014 Financial Plan (2009-2023). Approximately 15% of fare revenues are forecast to come from Sounder commuter rail, 41% from Regional express bus, and 44% from Link light rail.

Bonding: Transit infrastructure is inherently long-lived; therefore, it is appropriate to finance some

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weekdays to 17. Access to and parking at several stations will also be improved along the Seattle to Lakewood and Seattle to Everett alignments.

Express Bus Capital Program: ST Express Bus projects include park-and-ride lots, high occupancy

vehicle (HOV) lanes/access, transit centers and vehicles. The plan also provides for additional bus routes and funding for the design of an operating and maintenance facility.

Link Light Rail Capital Program: Approximately 36 additional miles of voter approved light rail will be

added to the 19 miles (Sea-Tac to UW) already in service or under construction. To the north light rail will extend from the University of Washington through Northgate with a terminus in Lynnwood, to the south from Sea-Tac International Airport to Kent Des Moines Road, with preliminary funding for design through to South 272nd Street or the Federal Way Transit Center, and to the east from Seattle through Bellevue to the Overlake Transit Center area of Redmond. Light rail trains will provide service to 19 new stations up to 20 hours a day with a frequency of every 6 minutes during peak commuting periods.

Transit Operations: Transit operations costs include service improvements under the Sound Move

program (e.g., Sounder extension to Lakewood, Link light rail from UW to Sea-Tac) as well as expanding existing and additional new services approved by the voters in November, 2008. Note that Operating and Maintenance costs related to new service will not be incurred until the new service becomes operational.

System-wide Activities: The Financial Plan includes funding to support projects that impact the system

at large such as research and technology, fares administration, future phase planning, agency administration and other expenditures that are essential to planning for and maintenance of a regional transit system consistent with that approved by voters.

Debt Service: The Financial Plan anticipates future issuances of 30-year bonds to provide sufficient

financial capacity needed to complete all voter-approved transit programs. Debt service reflects all costs associated with issuing and retiring debt for the 2009 through 2023 time period. Debt service will continue beyond 2023 until all debt is fully retired. Sound Transit financial policies include provision for accelerated retirement of bonds once a capital program is completed.

Contribution to Reserves: The Financial Plan provides funding for the following three financial

reserves: (1) Bond reserves, (2) Two-months’ operations & maintenance reserve, and (3) Capital replacement / mid-life maintenance reserve.

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APPENDICES

A. Sound Transit Sources and Uses Summary (2009 through 2023) B. Sound Transit Operating Statement

C. Sound Transit Sources and Uses Statement D. Sound Transit Cost Indices

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Appendix A

Financial Plan - Sources & Uses Summary* 2009 through 2023

(YOE Dollars in Millions)

North South East System

Sources of Funds Snohomish King King King Pierce Wide Total

Sound Transit Tax Revenues 1,405 3,335 1,701 2,811 2,026 - 11,278

Grant Revenue - Federal / Local 129 1,577 184 304 217 1 2,412

Bond Proceeds 440 2,222 822 1,917 328 - 5,729

TIFIA Proceeds 106 399 200 585 40 - 1,330

Fares & Other Revenues 100 448 193 449 304 6 1,499

Interest Earnings - - - 167 167

Total Sources 2,180 7,980 3,099 6,067 2,914 174 22,415

Uses of Funds Snohomish King King King Pierce Wide Total

Capital Expenditures

Sounder Commuter Rail 74 - 58 - 1,141 - 1,273

Regional Express Bus 52 - 36 368 50 - 506

Link Light Rail 1,070 5,061 1,135 3,800 163 - 11,228

Service Delivery 48 14 54 108 89 1 313

Agency Admin - - - 40 40

System-wide Activities 8 32 21 26 3 92 183

Total Capital 1,252 5,107 1,303 4,301 1,446 133 13,543

O & M Expenditures

Sounder Commuter Rail 146 - 275 - 349 770

ST Express Bus 278 - 191 912 439 1,820

Link Light Rail 12 939 325 29 94 1,399

System-wide Activities 35 79 25 111 19 606 874

Total O&M 470 1,018 816 1,052 901 606 4,863

Debt Service 189 1,305 561 502 197 - 2,754

TIFIA Debt Service - - - -

Bond Reserve Deposits 19 185 68 74 22 - 368

O&M Reserve Contributions 7 13 12 15 13 - 60

Capital Reserve Contributions 160 139 254 234 357 32 1,176

System-wide Activities 69 164 82 137 100 (552) -

Change in Cash 14 50 2 (248) (123) (45) (349)

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2015 Financial Plan

(YOE Dollars in Thousands)

1997- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 REVENUES

ST District Taxes

Sales & Use Tax 1,336,157 219,020 239,785 259,164 277,424 273,286 393,909 500,619 525,431 545,454 586,387 632,175 646,756 Motor Vehicle Excise Tax (MVET) 350,929 64,714 66,308 70,203 72,011 70,927 64,645 66,476 65,429 66,249 68,576 73,581 75,397 Rental Car Tax 15,200 2,166 2,245 2,427 2,527 2,554 2,784 2,469 2,490 1,979 2,759 3,050 2,867

TOTAL TAX REVENUES 1,702,286 285,900 308,338 331,794 351,962 346,767 461,338 569,564 593,350 613,681 657,721 708,806 725,021 Fares & Other Operating Revenue

Commuter Rail 5,197 2,263 3,002 5,122 6,623 7,832 7,780 7,134 8,336 9,481 9,484 10,465 9,610 Link Light Rail - - - - 2,372 9,609 12,039 14,013 14,846 15,876 16,188 Regional Express Bus 32,748 10,943 13,034 13,023 15,406 17,825 18,896 20,846 25,742 30,652 32,614 33,839 32,680

TOTAL FARES & OTHER REVENUE 37,945 13,206 16,036 18,145 22,029 25,657 29,048 37,589 46,117 54,145 56,944 60,180 58,478

INTEREST EARNINGS 175,720 10,626 26,090 37,265 24,952 23,445 12,360 14,122 20,875 (3,054) 7,974 4,361 12,425

TOTAL OPERATING REVENUES 1,915,950 309,731 350,464 387,204 398,943 395,868 502,746 621,275 660,341 664,773 722,640 773,347 795,924

OPERATING EXPENSES

Operating & Maintenance Costs

Commuter Rail 39,696 16,782 22,377 24,125 25,849 32,792 37,787 33,285 32,566 33,571 37,013 38,899 50,520 Link Like Rail 2,757 7,235 6,539 7,031 16,421 9,374 30,684 68,596 60,098 56,415 55,132 60,465 74,223 Regional Express Bus 161,799 40,934 59,070 64,778 78,956 81,862 85,144 96,326 96,596 101,483 104,091 108,129 124,893 System-wide 79,265 27,655 29,925 30,119 19,045 36,434 21,439 23,802 23,559 25,422 28,557 37,039 42,802

TOTAL OPERATING EXPENSES 283,518 92,607 117,911 126,054 140,272 160,463 175,055 222,009 212,819 216,891 224,793 244,532 292,437

NET OPERATING INCOME 1,632,433 217,125 232,553 261,150 258,671 235,405 327,691 399,266 447,522 447,881 497,846 528,815 503,486

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2015 Financial Plan

(YOE Dollars in Thousands)

REVENUES

ST District Taxes Sales & Use Tax

Motor Vehicle Excise Tax (MVET) Rental Car Tax

TOTAL TAX REVENUES

Fares & Other Operating Revenue Commuter Rail

Link Light Rail Regional Express Bus

TOTAL FARES & OTHER REVENUE INTEREST EARNINGS

TOTAL OPERATING REVENUES OPERATING EXPENSES

Operating & Maintenance Costs Commuter Rail

Link Like Rail Regional Express Bus System-wide

TOTAL OPERATING EXPENSES NET OPERATING INCOME DEBT SERVICE

Principal & Interest

NET INCOME 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 674,710 703,215 731,968 760,326 789,069 820,190 853,777 889,125 928,183 969,662 1,012,818 1,057,581 1,104,555 77,437 79,835 82,693 85,695 88,691 91,976 95,368 98,898 102,567 106,366 110,416 114,642 119,122 2,940 3,015 3,092 3,171 3,251 3,334 3,419 3,506 3,596 3,687 3,781 3,878 3,977 755,087 786,065 817,753 849,192 881,011 915,501 952,564 991,530 1,034,346 1,079,715 1,127,015 1,176,100 1,227,654 9,920 9,920 10,230 10,540 11,340 11,970 12,600 13,760 14,400 15,360 16,320 17,280 18,240 16,675 26,100 29,000 31,900 40,800 46,200 68,340 84,490 97,440 97,500 99,000 100,500 106,080 33,060 32,490 33,060 33,630 34,161 34,354 34,547 26,970 23,788 26,250 29,445 29,640 31,365 59,655 68,510 72,290 76,070 86,301 92,524 115,487 125,220 135,628 139,110 144,765 147,420 155,685 5,767 7,622 9,453 11,738 13,765 15,141 16,799 17,899 19,300 19,929 24,698 30,052 35,896 820,510 862,197 899,496 937,000 981,077 1,023,166 1,084,850 1,134,649 1,189,274 1,238,754 1,296,479 1,353,572 1,419,235 54,324 58,018 60,547 62,085 64,580 67,134 69,301 70,429 63,864 65,488 67,146 68,899 70,607 88,878 95,426 98,232 101,085 109,777 140,102 155,612 204,500 226,231 236,120 242,873 250,804 257,642 132,640 133,492 138,358 142,833 141,311 147,049 153,207 114,189 117,462 120,868 124,385 127,904 131,545 51,462 56,572 51,680 53,337 46,300 46,525 47,991 49,221 49,301 50,563 55,723 57,206 58,721 327,303 343,507 348,817 359,339 361,968 400,810 426,111 438,339 456,858 473,040 490,127 504,813 518,514 493,206 518,690 550,679 577,660 619,109 622,356 658,738 696,310 732,416 765,714 806,351 848,759 900,721 111,547 150,552 191,546 244,452 290,823 337,652 387,792 421,261 466,463 477,331 482,630 487,816 488,715 381,659 368,138 359,133 333,208 328,286 284,704 270,946 275,049 265,953 288,383 323,721 360,944 412,006

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2015 Financial Plan

(YOE Dollars in Thousands)

REVENUES

ST District Taxes Sales & Use Tax

Motor Vehicle Excise Tax (MVET) Rental Car Tax

TOTAL TAX REVENUES

Fares & Other Operating Revenue Commuter Rail

Link Light Rail Regional Express Bus

TOTAL FARES & OTHER REVENUE INTEREST EARNINGS

TOTAL OPERATING REVENUES OPERATING EXPENSES

Operating & Maintenance Costs Commuter Rail

Link Like Rail Regional Express Bus System-wide

TOTAL OPERATING EXPENSES NET OPERATING INCOME DEBT SERVICE 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 1,156,841 1,210,532 1,267,152 1,326,549 1,389,415 1,454,785 1,523,683 1,594,021 1,670,776 1,748,962 1,829,572 1,913,531 - - - -4,078 4,182 4,289 4,398 4,510 4,625 4,743 4,864 4,988 5,115 5,245 5,379 1,160,919 1,214,714 1,271,441 1,330,947 1,393,925 1,459,410 1,528,426 1,598,884 1,675,763 1,754,077 1,834,817 1,918,910 19,200 20,160 21,120 22,400 23,360 24,640 25,920 26,560 26,880 27,520 28,160 28,480 107,640 109,330 111,020 112,710 114,400 125,020 126,980 128,800 140,100 142,200 144,450 146,550 31,570 31,775 33,755 33,970 35,298 35,520 37,030 37,260 38,305 38,540 39,010 40,422 158,410 161,265 165,895 169,080 173,058 185,180 189,930 192,620 205,285 208,260 211,620 215,452 42,795 47,760 53,650 60,807 69,139 79,000 90,291 103,426 117,788 134,484 152,602 172,953 1,362,124 1,423,740 1,490,986 1,560,835 1,636,122 1,723,590 1,808,647 1,894,931 1,998,837 2,096,821 2,199,039 2,307,315 72,384 74,276 76,141 78,093 80,176 82,228 84,358 86,650 88,881 91,189 93,654 96,091 265,582 273,913 282,826 288,128 297,384 307,252 315,980 326,489 335,730 343,977 352,124 363,556 135,244 139,059 143,050 147,132 151,390 155,762 160,318 164,985 169,840 174,842 180,012 185,387 58,924 60,489 62,103 63,772 65,499 67,284 69,124 71,020 72,985 75,023 77,115 79,265 532,134 547,736 564,120 577,125 594,449 612,525 629,781 649,145 667,437 685,030 702,905 724,300 829,990 876,003 926,866 983,710 1,041,673 1,111,066 1,178,866 1,245,786 1,331,400 1,411,791 1,496,133 1,583,016

Figure

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References